Problem

Interpreting the Economic Return from Investing Ratio (AP12-7)Verizon Communications Inc....

Interpreting the Economic Return from Investing Ratio (AP12-7)

Verizon Communications Inc. was formed by the merger of Bell Atlantic Corporation and GTE Corporation in 2000. It is the largest provider of wireline and wireless communication services in the United States, with a presence in over 150 other countries. The following information was reported in the company’s 2008 annual report for available-for-sale securities:

 

(DOLLARS IN MILLIONS)

 

2008

2007

Investment portfolio

$ 1,328

$ 1,538

Investment income

282

2 11

Required:

1. Compute the economic return from investing ratio for 2008.

2. What do the results in requirement (1) suggest about Verizon?

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